Warner Bros. Discovery swung to loss of $148 million and saw total revenue decline 6% to $9.05 billion in its third quarter of 2025 as the media giant is preparing to either split or sell all or parts of its business amid an ongoing strategic review of alternatives.
The overall results were negatively impacted by comparisons to the 2024 Olympics in Europe, as well as a $1.8 billion charge that included restructuring expenses.
Warner’s studio & streaming business showed strength with revenue growth of 8% to $5.28 billion and profit growth of 58% to $1 billion. Streaming’s profit climbed 19% to $345 million, while the studios business hit a profit of $695 million, compared to $308 million a year ago. On the flip side, the global linear networks business’ continued to struggle as revenue fell 22% to $3.9 billion, while profit tumbled 20% to $1.7 billion.
Warner continues to expect that its streaming business will generate a profit of at least $1.3 billion and its studios business will generate a profit of at least $3 billion in 2025. The streaming business also remains on track to reach at least 150 million remains subscribers by the end of 2026.
Here are the quarter’s results:
Net loss $148 million, compared to a profit of $135 million a year ago. The loss included $1.3 billion of “pre-tax acquisition related amortization of intangibles, content fair value step-up, and restructuring expenses.”
Earnings Per Share: A loss of 6 cents per diluted share, compared to a loss of 9 cents a share expected by analysts surveyed by Yahoo Finance.
Revenue: $9.05 billion, compared to $9.18 billion expected by analysts surveyed by Yahoo Finance.
Streaming subscribers: Added 2.3 million subscribers for a total of 128 million globally.
WBD generated $701 million of free cash flow during the third quarter, including approximately $500 million in separation-related costs. It also repaid $1.2 billion in debt during the quarter for a total of $34.5 billion in gross debt. It ended the quarter with $4.3 billion of cash on hand.
WBD avoids strategic review talk as split remains on track for April
In October, WBD put itself up for sale, citing “unsolicited interest” from “multiple parties.”
Paramount has made three separate takeover bids, which ranged between $19 and $23.50 per share and were rejected for being too low. Meanwhile, Netflix and Comcast have both signaled their interest in looking at potential deals for the company’s studio and streaming assets. The former has reportedly tapped the investment bank Moelis & Co. to explore a potential bid. Experts who spoke to TheWrap also didn’t rule out Amazon as a potential suitor as the tech giant looks to continue scaling Prime Video and its advertising business.
While both WBD CEO David Zaslav and chairman emeritus John Malone have expressed hope for a bidding war, it isn’t guaranteed that one will ultimately materialize.
In addition to continuing on with its planned split into Warner Bros. and Discovery Global, which remains on track for completion in April, the company’s board will also consider separate transactions for those two companies or a deal for the entire combined company. WBD also said it would consider an alternative separation structure that would enable a merger of Warner Bros. and spin-off of Discovery Global to its shareholders.
In its shareholder letter, Warner said it would not make any further announcements until the board approves a specific transaction or determines further disclosure is appropriate or necessary. As a result, the company did not answer any questions on the topic during its earnings call, though Warner Bros. Discovery CEO David Zaslav told analysts an “active process” is underway.
Streaming grows profit, hits 128 million subscribers globally
The total 128 million subscribers included 58 million domestic and 70 million international subscribers.The streaming business saw subscriber-related revenues grow 1% to $2.6 billion during the quarter. Global average revenue per user came in at $6.64, while domestic ARPU was $10.40 and international ARPU was $3.70.
Ad revenue grew 15% to $231 million, primarily driven by an increase in ad-lite subscribers, partially offset by “domestic pricing pressures.”Distribution revenue was flat at $2.31 billion as the company saw a 16% increase in subscribers as HBO Max continued its global expansion.
The streamer’s growth was offset by the impact of a previously disclosed domestic distribution renewal with a former related party and international revenue that was negatively impacted by a legal ruling that may require adjustments to prior customer bills. Also weighing down the streaming segment was a 26% decline in content revenue to $79 million due to lower third-party licensing as HBO Max launched in new international markets.
Looking ahead, the company expects distribution revenue growth in the low single digit range during the fourth quarter. It also expects HBO Max launches in European markets, subscriber growth, its password sharing crackdown and a recent U.S. price increase to boost HBO Max distribution revenue in the first half of 2026.
The absence of the NBA will also have a negative impact on streaming advertising revenue in the first half of 2026. It also expects “modest upfront marketing and startup costs” in the latter half of the fourth quarter due to HBO Max’s upcoming launches in Germany, Italy, the UK and Ireland in 2026. The service is now available in over 100 global markets.
Studio content revenue soars on “Superman,” “The Conjuring: Last Rites” and “Weapons” box office performance
The studios business saw a 67% drop in distribution revenue to $2 million, while content revenue soared 26% to $3.1 billion as “Superman,” “The Conjuring: Last Rites” and “Weapons” boosted the box office. The company continues to expect that the studios business will reach at least $3 billion in profit in 2025.
Warner Bros. surpassed $4 billion in 2025 global box office revenue after releasing 11 films.The strong box office performance of those titles, carryover from “F1,” boosted theatrical revenue 74%. Content revenue was also boosted by higher content licensing revenue. TV revenue fell 13%, primarily driven by lower initial telecast deliveries, while games revenue fell 23%, driven by lower carryover in the current year quarter.
Upcoming DC Studios projects include “Lanterns” in early 2026 on the TV side and “Supergirl” and “Clayface” in summer and fall 2026 on the film side. James Gunn is also writing “Superman” sequel “Man of Tomorrow.”
“We remain incredibly excited about the momentum at DC Studios and its prospects to re-connect with fans and ignite the next generation of these beloved characters,” the company wrote in its quarterly shareholder letter.
Warner Bros. Television Group is also expected to deliver more scripted episodes to streaming platforms than broadcast and cable networks in 2026. Projects scheduled for near-term delivery include Hulu’s “Not Suitable for Work,” Netflix’s “Unaccustomed Earth,” Fox’s “Memory of a Killer,” Apple’s “Ted Lasso” and “Shrinking” and the CW’s “All American.”
Cord-cutting, Olympics comparison weigh on linear networks
Global linear networks distribution revenue fell 8% to $2.39 billion due to a 9% drop in domestic linear pay TV subscribers, offset by a 2% bump in affiliate rates. It was also negatively impacted by lower international affiliate rates and subscriber declines.
Ad revenue fell 21% to $1.19 billion due to a 26% decline in domestic audiences and the negative impact of a strong news cycle on CNN and the Olympics in Europe in the prior year, which impacted the year-over-year growth rate by 3%. Content revenue fell 74% to $214 million, primarily due to a $578 million impact from sublicensing of Olympic sports rights to broadcast networks throughout Europe in the prior year.
WBD recently launched its new CNN All Access streaming service for $6.99 per month. It also plans to launch a TNT Sports streaming service in the U.S., which will include all of the linear networks’ sports content, as well as select content from Bleacher Report and House of Highlights. The TNT Sports streaming app will be available as a standalone service and the company will also look for bundling opportunities. CNN All-Access and the TNT Sports streamer are also available at no additional cost to pay TV subscribers.
“We believe TNT Sports provides us with great optionality given its resonance with U.S. audiences and distributors,” the company said in its shareholder letter. “Our major sports rights deals are secure with no near-term renewals, and we intend to continue intelligently pursuing rights that may become available and are additive to our current offering.”
Looking ahead, the company expects the MLB playoffs and new sports rights to drive improvements in year over year advertising compared to the third quarter.It noted that some of the NBA cost savings have been reinvested in Big 12 football and basketball and Big East Basketball rights and related production expenses, content and brand marketing across its portfolio, including CNN All Access.
More to come…
